Amazon Disputes FTC Lawsuit Over Sponsored Ads as Deceptive and Misleading

Amazon has pushed back against a lawsuit from the Federal Trade Commission (FTC) and 22 states alleging that the online retail giant engaged in deceptive practices in its sponsored ads. The FTC claims that Amazon 'secretly inflated prices' in its search advertising auctions, ultimately 'concealing unfair charges' from advertisers.

The alleged scheme has 'likely extracted tens of billions of dollars' from unwitting advertising customers, according to the FTC. However, Amazon strongly disagrees with these allegations, calling them 'misguided' and 'patently false.'

Amazon's Sponsored Products search ads have been under scrutiny for several years, with the company facing a separate lawsuit in 2024 alleging that it operates as an illegal monopoly. In its latest rebuttal to the FTC's complaint, Amazon claimed that advertisers were not harmed by the alleged scheme, and that 'customers saved over $230 a year on average last year' through deals, coupons, and other promotions.

The company also pointed out that the average cost-per-click for its Sponsored Products search ads remained flat adjusted for inflation between 2019 and 2024, while conversion rates grew by 24% during the same period. Amazon claimed that it has shared this data with the FTC on multiple occasions, but that they have shown little interest in engaging with the facts.